SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 14, 1999
Express Scripts, Inc.
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(Exact Name of Registrant as specified in its Charter)
Delaware 0-20199 43-1420563
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(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
13900 Riverport Drive, Maryland Heights, Missouri 63043
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (314) 770-1666
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Item 2. Acquisition or Disposition of Assets.
On October 13, 1999, YourPharmacy.com, Inc. ("YPC"), a wholly owned
subsidiary of Express Scripts, Inc., ("ESI"), completed its contribution of
certain operating assets constituting its e-commerce business in prescription
and non-prescription drugs and health and beauty aids to PlanetRx.com, Inc.,
("PlanetRx") in exchange for 19.9%, or 10,369,990 shares, of the common equity
of PlanetRx (the "Shares"). In addition, PlanetRx assumed certain obligations of
YPC. Simultaneously, PRX Acquisition Corp. ("Acquisition Sub") merged into
PlanetRx and shareholders of PlanetRx received stock in PRX Holdings, Inc.
("Holdings"), which changed its name to "PlanetRx.com Inc." Additionally,
PlanetRx assumed options granted to YPC employees which converted into options
to purchase approximately 1.8 million shares of PlanetRx common stock. The
consummation of the transaction occurred immediately preceding the closing of
PlanetRx's initial public offering ("IPO") of common stock. Based on the IPO
price of $16 per share, YPC received consideration valued at approximately $166
million. The terms of the transaction were determined pursuant to arms-length
negotiations.
The transaction was consummated pursuant to the terms of the Asset
Contribution and Reorganization Agreement (the "Contribution Agreement") entered
into as of August 31, 1999 among ESI, YPC, PlanetRx.com, Inc., Holdings, and
Acquisition Sub. A copy of the Contribution Agreement is filed as Exhibit 2.1 to
this Current Report on Form 8-K and incorporated herein by reference.
Pursuant to the Contribution Agreement, PlanetRx also agreed to appoint a
designee of ESI to its board of directors within five business days after
October 13, 1999, and agreed to include the director designated by ESI in the
group of nominees that PlanetRx recommends for election at each meeting of their
stockholders to elect directors as long as ESI's percentage beneficial ownership
is not less that 5%. ESI has designated Barrett A. Toan, President and Chief
Executive Officer of ESI, who became a director of PlanetRx on October 19, 1999.
In connection with the IPO, YPC agreed not to dispose of or hedge any of
its common stock or securities convertible into or exchangeable for shares of
common stock for 180 days after October 7, 1999, except with the prior written
consent of Goldman, Sachs & Co., lead underwriters for the PlanetRx IPO.
Goldman, Sachs & Co., however, may in its sole discretion, at any time without
notice, release all or any portion of the shares subject to lock-up agreements.
A copy of the Lock-up Agreement is filed as Exhibit 10.4 to this Current Report
on Form 8-K and incorporated herein by reference.
Pursuant to the Contribution Agreement, YPC was made a party to an
Investors Rights Agreement (the "Investors' Rights Agreement") dated as of June
3, 1999 between PlanetRx and certain investors of PlanetRx. The Investors'
Rights Agreement, as amended, provides registration rights for certain holders
of common stock of PlanetRx, including YPC. The holders are entitled to demand
that PlanetRx register their shares of PlanetRx common stock under the
Securities Act of 1933, as amended (the "Securities Act"), at any time after six
months after October 7, 1999, the effective date of the IPO of PlanetRx, upon
request from the holders of at least 30% of the registrable securities with an
anticipated aggregate offering price of at least $7.5 million. PlanetRx is not
required to effect more than two such demand registrations. If PlanetRx proposes
to register any of its securities under the Securities Act, either for its own
account or for the account of other securityholders exercising registration
rights, these holders are entitled to certain "piggyback" registration rights,
i.e., notice that PlanetRx is effecting a registration under the Securities Act
and the right to include their shares therein, subject to certain conditions and
limitations. Further, the holders may require PlanetRx file additional
registration statements on Form S-3 upon request from the holders of at least
30% of the registrable securities and if the aggregate offering price is at
least $2.0 million. All of these registration rights are subject to conditions
and limitations. These rights will not terminate with respect to YPC until
October 13, 2004. In the event PlanetRx effects another public offering, YPC has
agreed that it will not sell or dispose of any of its Shares for a period
specified by the managing underwriter (not to exceed 180 days), without the
prior written consent of such underwriter, subject to certain conditions and
limitations. A copy of the Investors' Rights Agreement, and the Amendment
thereto, are filed as Exhibit 10.2 and Exhibit 10.3, respectively, to this
Current Report on Form 8-K and incorporated herein by reference.
PlanetRx also agreed to certain additional registration rights provisions
attached as Exhibit B to the Contribution Agreement. Pursuant to these
provisions, PlanetRx agreed, as soon as practicable after the closing of the
transactions contemplated by the Contribution Agreement, to file a registration
statement under the Securities Act covering one-half of the Shares and to use
its best efforts to cause it to become effective within 180 days after such
closing and to keep such registration statement effective until the earlier of
(x) two years after the closing, (y) the sale of all the Shares covered by the
registration statement, and (z) the date on which all the Shares held by YPC may
immediately be sold under Rule 144 under the Securities Act during any 90-day
period. The obligations of PlanetRx are subject to certain conditions and
limitations. PlanetRx has agreed to pay all expenses incurred in connection with
such registration (other than fees and disbursements of separate counsel for
YPC). A copy of the registration rights provisions are filed as Exhibit B to
Exhibit 2.1 to this Current Report on Form 8-K, and incorporated herein by
reference.
In addition, as previously reported on ESI's Current Report on Form 8-K
dated August 31, 1999 (filed September 2, 1999) (File No. 0-20199), on August
31, 1999, ESI entered into an Agreement with PlanetRx pursuant to which ESI has
designated PlanetRx as ESI's exclusive internet pharmacy in the United States.
The agreement became effective on October 13, 1999. See Item 5 herein, which is
hereby incorporated by reference herein.
The summary contained in this Current Report on Form 8-K of certain
provisions of such agreements are not intended to be complete and are qualified
in their entirety by reference to the full text of such agreements, copies of
which are incorporated by reference as exhibits hereto and incorporated by
reference herein.
Item 5. Other Events.
As previously reported on ESI's Current Report on Form 8-K dated August 31,
1999 (filed September 2, 1999) (File No. 0-20199), on August 31, 1999, ESI
entered into an Agreement with PlanetRx pursuant to which ESI has, subject to
certain exceptions set forth therein, designated PlanetRx as ESI's exclusive
internet pharmacy in the United States for a term of five years, with a right to
participate in the ESI pharmacy network for ten years. Under the agreement,
customers who are covered under an ESI pharmacy benefit plan will generally be
able to fill prescriptions at PlanetRx's website and will be entitled to receive
the benefits of the coverage under the ESI pharmacy benefit plan. The agreement
also provides for various co-operative marketing activities by ESI and PlanetRx.
Pursuant to this agreement, PlanetRx will make certain payments to ESI annually
over the term of the agreement, with a minimum payment obligation of $11,650,000
annually for five years, plus reimbursement of certain expenses, with a
potential five year extension (subject to certain conditions), plus an
incremental fee based on ESI's members' activity on PlanetRx's website. ESI has
committed to exclusively co-brand and co-market PlanetRx as ESI's online
pharmacy. Co-branding includes but is not limited to placing PlanetRx's name,
logo and other information about PlanetRx on ESI's website and marketing and
sales materials. Co-marketing includes ESI promoting PlanetRx as ESI's online
pharmacy in ESI's marketing and sales activities. The agreement became effective
on October 13, 1999. PlanetRx will also be included in the ESI network as an
authorized pharmacy for a minimum of ten years. The agreement contains customary
termination, default and indemnification provisions. As part of the
relationship, PlanetRx agreed to certain exclusivity provisions that precludes
it from directly or indirectly operating as a pharmacy benefit manager. A copy
of the Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) The following exhibits are filed as part of this report on Form 8-K:
Exhibit No. Description
2.1 Asset Contribution and Reorganization Agreement dated August
31, 1999 by and among PlanetRx.com, Inc., PRX Holdings, Inc.,
PRX Acquisition, Corp., YourPharmacy.com, Inc., and Express
Scripts, Inc. (incorporated by reference to the Exhibit No.
2.1 to PlanetRx's Registration Statement on Form S-1, as
amended (Registration Number 333-82485)).
10.1 Agreement dated August 31, 1999 by and among Express Scripts,
Inc. and PlanetRx.com, Inc.(incorporated by reference to the
Exhibit No. 10.17 to PlanetRx's Registration Statement on
Form S-1, as amended (Registration Number 333-82485)).
10.2 Amended and Restated Investors' Rights Agreement dated as of
June 3, 1999, (incorporated by reference to the Exhibit No.
4.2 to PlanetRx's Registration Statement on Form S-1, as
amended (Registration Number 333-82485)).
10.3 Amendment of Amended and Restated Investors' Rights Agreement
dated as of October 13, 1999 by and between PlanetRx.com,
Inc. and YourPharmacy.com, Inc. (incorporated by reference to
Exhibit 4 to Schedule 13D dated October 21, 1999 (filed
October 22, 1999) filed by Express Scripts, Inc. with respect
to PlanetRx.com, Inc. (File No. 000-27437)
10.4 Lock-up Agreement dated as of October 13, 1999 between
YourPharmacy.com, Inc. and Goldman Sachs & Co. (incorporated
by reference to Exhibit 5 to Schedule 13D dated October 21,
1999(filed October 22, 1999) filed by Express Scripts, Inc.
with respect to PlanetRx.com, Inc. (File No. 000-27437)
99.1 Press release, dated October 14, 1999, by Express Scripts,
Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXPRESS SCRIPTS, INC.
Date: October 20, 1999 By: /s/ Barrett A. Toan
Barrett A. Toan
President and Chief Executive
Officer
Exhibit 99.1
PlanetRx.com and Express Scripts Today Complete Acquisition Transaction
PlanetRx.com becomes exclusive online pharmacy for Express Scripts'
36 million members
SOUTH SAN FRANCISCO, CA and ST. LOUIS, MO. - October 14, 1999 -
PlanetRx.com, Inc. (NASD:PLRX) and Express Scripts, Inc. (NASD:ESRX) today
announced that PlanetRx.com has completed the acquisition of Express Scripts'
e-commerce pharmacy, making PlanetRx.com (www.planetrx.com) the exclusive online
pharmacy for Express Scripts and its 36 million members. In addition to
purchasing over-the-counter health and beauty products at PlanetRx.com, with the
closing of the deal today, qualified Express Scripts members can now use their
pharmacy benefit program to purchase prescriptions at PlanetRx.com with their
customary insurance co-payments.
Marketing programs have also begun to inform Express Scripts members of
their new PlanetRx.com benefits. Express Scripts will retain the
yourPharmacy.com website (www.yourpharmacy.com), which will continue as a portal
for Express Scripts members, providing comprehensive news and benefits
information.
Building on each other's strengths, the integration of Express Scripts and
PlanetRx.com provides consumers a more convenient, more complete pharmacy
experience. Together, PlanetRx.com and Express Scripts now offer qualified
Express Scripts members one convenient place to shop for over-the-counter health
and beauty products and their prescription drug needs, including traditional
30-day prescriptions and longer term, greater than 30-day prescriptions.
"Together, Express Scripts and PlanetRx.com offer consumers, employers and
health plans an outstanding combination of pharmacy knowledge, clinical
expertise, benefit services, shopping experience and order fulfillment available
through the Internet," said Barrett Toan, chief executive officer of Express
Scripts. "This relationship accelerates our Internet pharmacy initiatives and
enables us to focus on enhancing the entire pharmacy benefit and delivering
excellent member and client service."
The integration of PlanetRx.com and Express Scripts systems and
distribution operations ultimately benefits the consumer by providing excellent
customer service and selection, the value of affordable pharmaceuticals, and
great savings on health and beauty products. The companies have created a unique
relationship, resulting in an Internet pharmacy that owns and operates its
entire order, fulfillment and distribution process, a key component in
maintaining a consistently high level of quality control and customer service.
"We're excited to be up and running with Express Scripts," said William J.
Razzouk, chief executive officer of PlanetRx.com. "With this agreement we
increase our ability to serve the millions of consumers who are turning to the
Internet for reliable health information, affordable prescriptions and health
and beauty products, while maintaining the PlanetRx.com trademark of superior
customer service."
Terms of the agreement
Under the terms of the agreement between PlanetRx.com and Express Scripts,
Express Scripts obtained a 19.9% ownership in PlanetRx.com, which represents
approximately 10.4 million shares. PlanetRx.com will be the exclusive Internet
pharmacy serving Express Scripts' plan members for five years, with a potential
five-year extension. Under the joint operating agreement, PlanetRx.com will pay
Express Scripts fees in excess of $11 million annually.
About Express Scripts
Express Scripts, Inc. (www.express-scripts.com) is the nation's leading
independent full-service PBM and specialty managed care company. Through
facilities in seven states and Canada, the company serves thousands of clients
throughout North America, including managed care organizations, insurance
carriers, third-party administrators, employers and union-sponsored benefit
plans. Express Scripts is headquartered in St. Louis, Missouri.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statement in this press release regarding Express Scripts, Inc.'s
business which are not historical facts are "forward-looking statements" that
involve risks and uncertainties. For a discussion of such risks and
uncertainties, which could cause actual results to differ from those contained
in the forward-looking statements, see "Risk Factors" in the Company's Annual
Report of Form 10-K for the most recently ended fiscal year.
About PlanetRx.com
PlanetRx.com, Inc. (www.planetrx.com) a leading Internet healthcare
destination for commerce, content and community, delivers a convenient,
personalized and informed health and beauty shopping experience. With products
ranging from prescriptions to personal care items to the latest medical
information, PlanetRx.com gives consumers the ability to manage their own
healthcare in a convenient and secure environment. PlanetRx.com is one of three
online pharmacies to have received the Verified Internet Pharmacy Practice Sites
(VIPPS) seal of approval from The National Association of Boards of Pharmacy
(NABP). Headquartered in South San Francisco, the company operates its own
pharmacy and distribution center in Memphis, Tennessee to ensure the highest
quality customer care.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: The statements contained in this press release that are not purely
historical are forward-looking statements within the meaning of Section 21E of
the Securities and Exchange Act of 1934, as amended, including statements
regarding PlanetRx's expectations, beliefs, intentions, or strategies regarding
the future. All forward-looking statements included in this document are based
upon information available to PlanetRx as of the date hereof, and PlanetRx
assumes no obligation to update any such forward-looking statements.
Forward-looking statements involve risks and uncertainties, which could cause
actual results to differ materially from those projected. These and other risks
relating to PlanetRx's business are set forth in PlanetRx's Form S-1, as amended
and filed with the Securities and Exchange Commission on July 8, 1999, and the
other reports filed from time to time with the Securities and Exchange
Commission.
# # #
PlanetRx.com press contact:
Daphne Jackson, Niehaus Ryan Wong, Inc. 650-827-7071, [email protected]
Bryan Cohen, Niehaus Ryan Wong, Inc. 650-827-7066, [email protected]
Express Scripts press contact:
Diana Baumohl, Express Scripts, 314-702-7333, [email protected]
